GBP/USD hits $1.33 on Brexit optimism

Philip McHugh November 24th 2020 - 2 minute read

The pound got off to a strong start this week, jumping to a new two-month high on reports a UK-EU trade deal could be close.
Meanwhile, trade in Sterling is a little mixed this morning, with GBP/EUR stable at €1.1258 and GBP/USD climbing to $1.3370. GBP/CAD is muted at C$1.7415, while GBP/AUD and GBP/NZD stumble to AU$1.8170 and NZ$1.9109, respectively.
Looking ahead, news that Donald Trump has finally accepted Biden’s victory in the US election looks to cheer markets and dampen the appeal of the US dollar today.

What’s been happening?

The pound rallied at the start of the week on the back of reports that the UK and EU are getting close to finalising a Brexit deal despite ongoing disputes over fishing and legal rights.
Further bolstering Sterling sentiment was news that the Oxford/AstraZeneca coronavirus vaccine has proven effective at preventing Covid-19, with hopes that the UK government will be able to start rolling out the 100 million doses it pre-ordered soon.
However, it wasn’t all plain sailing for the pound, as the currency failed to consolidate at its best level yesterday after the governor of the Bank of England, Andrew Bailey, warned that a no-deal Brexit could have a greater economic cost than the coronavirus pandemic in the long-term.
The euro, meanwhile, struggled on Monday following the publication of the Eurozone’s latest PMI figures.
November’s preliminary releases revealed a larger-than-expected contraction in the Eurozone’s private sector as coronavirus restrictions crippled economic activity throughout the bloc.
At the same time, the US dollar gave ground yesterday as the announcement of another promising coronavirus vaccine dampened demand for the safe-haven currency.

What’s coming up?

Turning to today’s session, the news that Donald Trump has finally agreed to allow the transition to Joe Biden to begin has given a boost to markets this morning.
In response, we have seen the US dollar already start to weaken, a trend that is likely to continue throughout the day amidst relief that the US election saga appears to finally be over.
In Europe, the publication of Germany’s latest IFO business climate index will be in focus for EUR investors, with the euro potentially coming under some pressure if business confidence began to deteriorate this month.
Finally, the spotlight for GBP investors is likely to remain on Brexit, with the pound potentially extending its recent gains if headlines remain optimistic on the chances for a deal.

Written by
Philip McHugh

Select a topic: